Morphological and molecular alterations in the circuitry of the dorsolateral prefrontal cortex (PFC) appear to contribute to the cognitive deficits in schizophrenia. In layer 3, these alterations include ~20% fewer dendritic spines, the principal site of excitatory inputs to pyramidal (PYR) neurons, and lower expression of glutamic acid decarboxylase 67 (GAD67), the enzyme responsible for most GABA synthesis, in parvalbumin (PV)- containing interneurons. Thus, schizophrenia appears to be associated lower levels of both excitation and inhibition in PFC layer 3. In monkey PFC, layer 3 PYR and PV neurons form a local network. PYR-to-PYR cell connections mediate recurrent excitation in the network and the PV-to-PYR cell connections mediate feedback inhibition. The proper weighting of activity in these connections maintains the balance between excitation and inhibition (E/I balance) that allows activity to propagate through the network without either dying out or increasing uncontrollably. E/I balance is maintained in the face of prolonged perturbations in circuit activity by adjustments in the levels of excitatory and inhibitory synaptic transmission through a process termed synaptic scaling or homeostatic synaptic plasticity (HSP). We propose (hypothesis H1) that the proximal or "upstream" cortical pathology in schizophrenia is a deficit in dendritic spines (and a corresponding loss of excitatory inputs) that is intrinsic to layer 3 PYR neurons. The resulting decrease in network activity evokes HSP signaling mechanisms that persistently increase mediators of local recurrent excitatory inputs and decrease mediators of PV cell feedback inhibition to layer 3 PYR neurons. Alternatively, lower expression of GAD67 in PV cells and reduced network inhibition could be the proximal pathology leading to the opposite pattern of synaptic changes (hypothesis H2). These hypotheses are tested in postmortem studies of schizophrenia (Aims 1 &2), and in proof-of-concept studies in mice with experimental reductions in either PYR cell dendritic spines or GAD67 expression in PV cells (Aim 3). The findings from this "cause-compensation" analysis of PFC circuitry will provide insight into potential targets for new therapeutic interventions in schizophrenia, and how each target should be manipulated. Thus, the proposed studies directly address NIMH Strategic Plan initiatives to use an understanding of neural circuitry and plasticity to develop novel therapies. PUBLIC HEALTH RELEVANCE: Through the use of innovative techniques and an explanatory model from basic neuroscience, the proposed studies provide a powerful strategy for distinguishing between cause and compensation in cortical circuitry alterations in schizophrenia. This distinction is essential for identifying pathophysiologically-based targets for novel therapeutic interventions that either ameliorate the cause or enhance the compensation.